A 1.25 mg dose of quartz (particle size <2mu m), given intrabronchially to F344 rats, induced interstitial pulmonary fibrosis, associated with transformed alveolar epithelial cells. Six out of eight clones of epithelial cells, derived from the quartz-treated lungs at 15 months, were highly tumorigenic in nude mice, and showed chromosomal breaks, numerical chromosomal aberrations, DNA laddering, apoptosis, lack of response to TGF-beta1 and TGF-beta2, and increased serum requirement for growth and colony forming efficiency. In contrast, alveolar epithelial type II cells, derived from untreated rat lungs, showed lamellar bodies, were not tumorigenic in nude mice, showed no DNA laddering, were responsive to low serum concentration, and were growth inhibited by TGF-beta1 and TGF-beta2. All tumorigenic clones, as well as the normal cells, expressed mRNAs for TGF-beta1 and its cognate receptors TGFbetaR types I and II. The level of TGF-beta1 mRNA expression did not change with time in quartz-treated lungs. Surfactant protein-C mRNA was expressed in the quartz treated lungs up to 15 months, whereas tumors in nude mice formed by the tumorigenic clones showed no expression of SP-C, but expressed TGF-beta1 mRNA and its cognate receptors. The tumors in nude mice, which were histologically undifferentiated carcinomas, expressed p53 protein, but did not express the latent or active forms of TGF-beta1 protein, as was previously observed in lung carcinomas induced in the rat silicosis model, suggesting a similar TGF-beta1 regulatory mechanism in silica associated carcinogenesis.